Michigan Looks At In-state Micro Stock Exchanges

A new bill proposed by Michigan lawmaker Rep. Nancy Jenkins (R-Clayton) would let Michigan set up and operate small in-state stock exchanges. These exchanges would be targeted at what are normally called Micro-Cap companies, or companies that may be too small to list on a large exchange like the NYSE.

Under the terms of the bill, local residents could invest in local small businesses and trade shares similar to how investors already invest in Large-Cap businesses. As of January, Michigan already has in-state allowances for crowdfunding projects and platforms. Jenkins says this bill is designed to complement those efforts.

Crowdfunding enables individuals and small businesses to raise money for specific projects or for whole companies up to $1 million dollars through the use of platform sites like IndieGoGo or Kickstarter, or through peer-to-peer lending platforms like LendingClub. In these arrangements, individuals contribute to funding the project in exchange for giveaways in the case of Kickstarter, or repayment in the case of peer-to-peer lending. The new bill would allow small Michigan businesses to release a share class to local investors through an online portal overseen by the state.

The bill still needs to make it through votes in both houses. Some other states already maintain small local exchanges and could mark an emerging trends as sluggish local economies try to find ways to boost growth.